The US dollar continued to take advantage of vulnerability across other major currencies and advanced to 2-week highs.
There were no major US developments during the day as global trends dominated.
The US dollar continued to take advantage of vulnerability across other major currencies and advanced to 2-week highs as EUR/USD lost support.
Commodity currencies remained under pressure after the Australian Reserve Bank guidance shift with expectations that the Bank of Canada would also be more dovish.
Global equity markets corrected lower on future earnings doubts, although overall sentiment held firm on hopes for relatively dovish global central bank stances.
A firm dollar helped push precious metals weaker with gold at 1-week lows.
Crude was relatively resilient despite on-going doubts over demand trends, but dollar strength was again a negative influence.
Fluctuations in oil prices had some Sterling impact during Wednesday, although political considerations tended to dominate. There was controversial rhetoric from EU Council President Tusk, reinforcing fears over near-term deadlock. According to sources, the UK government is not expecting EU concessions ahead of next week’s scheduled parliamentary debate with speculation that the vote could be delayed even with on-going efforts to find a cross-party parliamentary consensus.
Sterling was able to secure a slight net advance against the weak Euro, but GBP/USD was unable to sustain a move above 1.2950 with markets monitoring rhetoric during Prime Minister May’s visit to Brussels on Thursday.
There are no expectations that the Bank of England will make any changes to interest rates at today’s policy meeting. There is also likely to be a higher degree of caution given uncertainty over the Brexit situation. Nevertheless, the forward guidance and forecasts will still be an important factor for Sterling sentiment with market expectations that growth forecasts will be reduced. Sterling was little changed in early Europe with EUR/GBP held around 1.1350 and GBP/USD around 1.2930.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:00 | German Industrial Production (M/M)(DEC, 2018) | 0.70% | -1.30% |
| 08:30 | GBP Halifax HPI (M/M)(JAN) | -0.50% | 2.20% |
| 09:00 | ECB Economic Bulletin | - | - |
| 12:00 | BOE MPC Vote Unchanged (FEB) | 9 | 9 |
| 12:00 | BOE MPC Vote Hike (FEB) | - | 0 |
| 12:00 | BOE MPC Vote Cut (FEB 01) | - | 0 |
| 12:00 | BoE QE Purchase Target (M/M)(FEB) | 435B | 435B |
| 12:00 | BoE Rate Decision (M/M)(FEB) | 0.75% | 0.75% |
| 12:00 | GBP BoE Inflation Report (Q/Q) | - | - |
| 12:15 | European Central Bank Yves Mersch Speech | - | - |
| 13:30 | USD Continuing Jobless Claims (JAN 12) | - | 1.782K |
| 13:30 | USD Initial Jobless Claims (JAN 12) | 221K | 253K |
| 14:30 | FOMC Member Richard Harris Clarida Speech | - | - |
| 23:30 | JPY Household Spending (Y/Y)(DEC, 2018) | -0.10% | -0.60% |
| 23:50 | JPY Current Account Total (Yen)(DEC, 2018) | 0.568B | 0.757B |